Berlin, Germany – Germany's robust defense industry finds itself increasingly vulnerable, caught in a strategic bind over its profound reliance on rare earth elements (REEs), minerals indispensable for modern military technology. With global supply chains under mounting geopolitical pressure, particularly from China's near-monopoly, Berlin is confronting a national security challenge that demands urgent and multifaceted solutions. The stability of Germany's rearmament plans and its contribution to European defense capabilities hinge critically on securing access to these vital materials.
Rare earth elements, a group of 17 chemically similar metallic elements, are the unseen enablers of contemporary high-tech systems, forming the backbone of both civilian innovations and advanced military hardware. These minerals are not "rare" in geological terms but are seldom found in commercially viable, concentrated deposits and are complex and costly to extract and refine. Their unique magnetic, catalytic, and optical properties make them irreplaceable in a vast array of defense applications, from precision-guided munitions to sophisticated radar systems.
In the defense sector, rare earths are crucial for developing more efficient, agile, and intelligent military capabilities. They are embedded in nearly every advanced weapon system and piece of equipment. Without these elements, many high-performance military systems could not be produced, significantly impacting a nation's defense capabilities. For example, a single F-35 fighter jet incorporates more than 900 pounds of rare earth elements, a DDG-51 class destroyer utilizes approximately 5,200 pounds, and a Virginia-class submarine requires close to 9,200 pounds. Neodymium-iron-boron magnets, a key application of REEs, are fundamental to precision-guided weapons, radar and sonar systems, satellite communications, and technologies for reducing the acoustic signature of military vehicles. Beyond these examples, REEs are vital components in night vision devices, communication equipment, navigation systems, advanced batteries, stealth technology, drones, and laser target designators. The escalating global defense spending and the proliferation of aerial and unmanned technologies, such as missiles and drones, have only amplified the demand for these critical materials.
For decades, China has strategically cultivated a near-total global monopoly on the production and processing of rare earth elements, particularly heavy rare earths. This dominance extends across the entire value chain, from mining to the manufacturing of downstream products like high-performance rare earth magnets, where China is the leading exporter. This unparalleled control has positioned rare earths as a potent geopolitical instrument, as famously articulated by former Chinese leader Deng Xiaoping in 1992: "The Middle East has oil. China has rare earths".
Germany's vulnerability is particularly pronounced; in 2024, 65.5% of its rare earth imports originated from China, a figure that, despite a marginal decrease from 69.1% in 2023, remains significantly higher than the European Union's average dependency of 46.3%. The full extent of Europe's reliance is even deeper, with the continent importing nearly half of its REEs and over 90% of its rare earth magnets from China.
Beijing has not hesitated to leverage this strategic advantage. Recent Chinese export controls, including the expansion of restrictions in October 2025 to encompass additional rare earth elements like holmium, erbium, thulium, europium, and ytterbium, along with associated technologies, have raised alarm bells across Europe. These measures not only create uncertainty in the market but also compel German importers to disclose sensitive information about their rare earth-based products, a practice that some view as a form of industrial espionage. Such disruptions pose an existential threat to the German and broader European defense industrial base, potentially leading to production halts, delayed deployment of advanced weapon systems, and an erosion of NATO's technological edge and deterrence capabilities.
The German industrial demand for rare earths reached nearly 6,000 tons in 2023, an amount entirely met through imports. Despite possessing some rare earth reserves, Europe currently lacks significant domestic mining operations and critically, the industrial-scale processing capabilities needed to refine raw ores into usable materials. This critical midstream processing gap, encompassing separation, metallization, and magnet manufacturing, represents Europe's most significant weakness. Unlike the United States, which maintains strategic stockpiles through its Department of Defense, the European Union lacks comparable reserves, leaving it exposed to supply shocks.
The current situation reflects a broader European challenge where decades of optimizing supply chains for efficiency have inadvertently created strategic dependencies that are now being weaponized. The potential for rare earth shortages threatens not only the defense sector but also the automotive industry, particularly electric vehicle production, and the green energy transition, as these sectors heavily rely on the same materials. Without securing upstream access and developing internal processing capabilities, Europe's aspirations for technological leadership and strategic autonomy remain tenuous.
Recognizing the severity of this strategic vulnerability, Germany and the European Union have embarked on a multifaceted approach to enhance supply chain resilience for rare earths. This strategy centers on boosting domestic extraction and processing, forging international partnerships, and fostering recycling innovation.
In 2024, Germany committed €1 billion to a raw materials fund aimed at supporting domestic processing capabilities and reducing its reliance on foreign imports. Efforts are underway, such as a recycling facility in Bitterfeld, operated by Heraeus, which aims to recover rare earth elements from electronic waste. However, domestic mining projects face significant hurdles, including the economic viability of extracting low-concentration deposits and complex regulatory and environmental challenges.
At the European level, the Critical Raw Materials Act (CRMA) represents a significant step forward. Enacted in 2024, the CRMA sets ambitious targets to increase mining and processing capacities within the EU by 2030, aiming to limit reliance on any single third country to no more than 65% for strategic raw materials. Additionally, the European Commission has unveiled the "RESourceEU" plan, a comprehensive strategy to boost raw material production and processing, including the establishment of a joint purchasing and strategic stockpiling center inspired by Japan's model. The EU is actively seeking partnerships with resource-rich countries like Australia, Canada, Ukraine, and the United States to diversify its supply chains.
Recycling is also identified as a promising long-term solution, with initiatives like the EU-funded REE4EU project targeting a 30% recovery rate for rare earths by 2030. However, current recycling rates for magnet waste remain below 1%, and scaling up these technologies presents significant technical and economic challenges.
The quest for rare earth autonomy is a complex and long-term undertaking. Building the necessary mines, refineries, and magnet manufacturing plants requires substantial investment—estimated at €15-20 billion for midstream infrastructure alone—and will take many years to materialize. Furthermore, the lack of industrial know-how and a skilled workforce in these specialized areas within Europe presents an additional barrier.
Germany and its European partners are at a crucial juncture. The ongoing rare earth challenge transcends mere economic concerns; it is a fundamental issue of national and collective security. Sustained political will, significant public and private investment, and robust international collaboration are paramount to mitigate current dependencies and build resilient, diversified supply chains. The ability to secure these indispensable materials will ultimately determine the future readiness and strategic independence of Germany's defense industry and Europe's broader geopolitical standing.
